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Amid questions on the depleting <keyword id="20776807" type="General" weightage="100" keywordseo="loan-to-deposit-ratio" source="keywords">loan-to-deposit ratio</keyword> in <keyword id="19895091" type="General" weightage="20" keywordseo="Indian-banks" source="keywords">Indian banks</keyword>, a recent report by <keyword id="19896146" type="General" weightage="20" keywordseo="Motilal-Oswal" source="keywords" meta.keywordsubtype="org" meta.entityname="Motilal Oswal" meta.hostid="269" meta.entityid="Motilal Oswal">Motilal Oswal</keyword> suggests that the loan-to-deposit (LD) ratio is likely to subside on its own in the coming months. The debate on loan-to-deposit ratio (LD), particularly concerning sluggish <keyword id="19998084" type="General" weightage="20" keywordseo="deposit-growth" source="keywords">deposit growth</keyword> and potential risks to <keyword id="20089808" type="General" weightage="20" keywordseo="financial-stability" source="keywords">financial stability</keyword> is raised by even the finance minister and the <keyword id="20151998" type="General" weightage="20" keywordseo="RBI-governor" source="keywords">RBI governor</keyword>. However, the report notes that on closer examination, the situation may not be as alarming as it seems. As of 9th August, 2024 the Indian <keyword id="19964544" type="General" weightage="20" keywordseo="banking-sector" source="keywords">banking sector</keyword>'s loan-to-deposit (LD) ratio stood at 77.2 %, which is slightly below its recent peak of 78.2 % on 22nd March 2024, and its all-time high of 78.8 % in September 2013. The report stated that typically a rising LD ratio is indicative of a tightness in the banking sector, potentially indicating overheating. A lower LD indicates that the bank is aggressive in its credit disbursement practises, which could be risky. It highlighted that an analysis of the sector's transactions with the Reserve Bank of India (RBI) through the liquidity adjustment facility (LAF), along with recent trends in the weighted average call rate (WACR), suggests that the current rise in the LD ratio does not indicate tightness, which is why there is no immediate cause of concern. In fact, the report added that the concern over weak deposit growth may be overstated. Historical data show that bank deposits grew at an average rate of 9.5 % during the pre-COVID period (January 2015 to February 2020) and 10.4 % in the post-COVID period (March 2020 to August 2024). Earlier, Finance Minister Nirmala Sitharaman also urged state-run banks to enhance deposit mobilization through attractive offers and focusing on Tier-2 and Tier-3 cities. Loan-to-deposit ratio pegs the total deposits received by the bank against the loans it has offered. It helps in understanding how liquid the bank is. The loan-to-deposit ratio (LDR) is a financial metric that compares a bank's total loans to its total deposits. It's used to assess a bank's liquidity and credit risk, and to inform lending and deposit-taking decisions The report said while the exact measures are unclear, the deposit growth could potentially be increased by making other asset classes less attractive through taxation or interest rates, or by boosting fiscal spending to increase net credit to the government. In its forecast, the report noted that private banks will witness a moderation in their <keyword id="19998083" type="General" weightage="20" keywordseo="credit-growth" source="keywords">credit growth</keyword>, while public sector banks will maintain a healthy credit growth rate. "Our analysis suggests that deposit growth could be raised by either making other asset classes unattractive (through taxation and/or interest rate) or increasing the growth in net credit to the government by pushing fiscal spending higher" the report added. Alternatively, policymakers might consider curtailing loan growth to lower the LD ratio. However, this could slow deposit growth, particularly if corporate credit growth remains weak. Encouraging savers to shift investments from other assets to bank deposits could also be an option, but this carries risks of overreach and potential damage to economic confidence. Das had also flagged the excessive growth, or froth developing in the personal loan space. Notably, while credit growth in unsecured personal loans like credit cards continues to decline, it remains elevated at 23.3% as of June 2024. However, this is a significant reduction from 34.2% witnessed in November 2023. As fiscal spending increases, bank credit to the government is likely to grow, which should elevate deposits and broad money supply. The report said "However, the extent of foreign capital inflows and the RBI's policy for managing these inflows remain uncertain". Last month, RBI governor Shaktikanta Das had also addressed this issue in the 50th meeting of MPC (Monetary Policy Committee). Per him, deposit mobilisation has been lagging credit growth for some time now. This may potentially expose the system to structural liquidity issues. "While there could be a debate regarding ‘deposits funding loans’ vis-à-vis ‘loans funding deposits’, the current regulatory concern stems from the fact that there could be structural changes happening which banks need to recognise and, accordingly, devise their strategies. Households and consumers who traditionally leaned on banks for parking or investing their savings are increasingly turning to capital markets and other financial intermediaries", Das said. Per him, while bank deposits continue to remain dominant as a percentage of financial assets owned by households, their share has been declining consistently, since households are now increasingly allocating their savings to mutual funds, insurance funds, pension funds and other avenues.

Loan-to-deposit ratio will subside on its own in coming months, notes Motilal Oswal report

<ul class="summary-list"><li>China's property crisis has impacted the country's biggest banks, increasing non-performing loans.</li><li>Beijing is urging banks to boost financing for "white list" property developers to help the sector.</li></ul>China's property crisis has hit the books of its biggest lenders, which are reporting an uptick in non-performing loans.Non-performing loans at China's big four banks — Industrial and Commercial Bank of China, Bank of China, China Construction Bank, and Agricultural Bank of China — jumped 10.4% in 2023, from 1.117 trillion Chinese yuan, about $155 billion, in 2022 to 1.23 trillion yuan.This is according to a <a target="_blank" href="https://asia.nikkei.com/Business/Markets/China-debt-crunch/Top-Chinese-banks-warn-of-spillover-risks-from-property-crisis">Nikkei</a> analysis based on the companies' earnings, which were released this week.The banks were all <a target="_blank" href="https://www.bloomberg.com/news/articles/2024-03-28/china-s-big-banks-post-scant-profit-gains-as-margins-shrink">profitable</a> last year, but their margins are being increasingly pressured by the fallout from China's real-estate debt crisis.Even so, Beijing is urging banks to boost financing for property developers featured on a <a target="_blank" href="https://www.businessinsider.com/china-economy-property-real-estate-crisis-white-list-bank-loans-2023-11">"white list" of companies.</a>China's real-estate sector has been mired in crisis since the second half of 2021, when a liquidity crunch at <a target="_blank" rel="" class="font-medium text-[#4A4A4A] underline hover:text-blue-700 visited:text-blue-600" href="https://markets.businessinsider.com/news/stocks/china-property-crisis-evergrande-81-billion-loss-housing-economic-slowdown-2023-7">Evergrande</a> — once China's second-largest developer — came to light.Evergrande is now in <a target="_blank" href="https://www.businessinsider.com/evergrande-ordered-liquidate-china-real-estate-property-crisis-winners-assets-2024-1">liquidation,</a> while <a target="_blank" rel="noopener" class="font-medium text-[#4A4A4A] underline hover:text-blue-700 visited:text-blue-600" href="https://www.businessinsider.com/evergrande-crisis-other-china-property-developers-in-trouble-outlook-2021-12">other Chinese real-estate developers</a> have run into similar issues and have begun <a target="_blank" rel="noopener nofollow" class="font-medium text-[#4A4A4A] underline hover:text-blue-700 visited:text-blue-600" href="https://www.caixinglobal.com/2023-07-31/cover-story-chinas-property-crisis-contagion-spreads-to-state-backed-developers-102087880.html">defaulting on their bond payments,</a> spurring fears the crisis could <a target="_blank" rel="noopener" class="font-medium text-[#4A4A4A] underline hover:text-blue-700 visited:text-blue-600" href="https://www.businessinsider.com/china-economy-xi-jinping-evergrande-debt-american-world-fallout-2021-10">spill over</a> into other sectors of the economy, and globally.Despite the rise in bad loans, Chinese lenders said they had enough buffers to weather the storm and will control lending risks to property developers, per Nikkei.

China's property crisis is bleeding into its banking sector, which is being asked to prop up developers 

<ul class="summary-list"><li>US stocks slid on Thursday as investors dealt with fresh volatility in bank shares.</li><li>All three indexes ended the day lower, with the Dow shedding almost 300 points. </li></ul>US stocks slid on Thursday as investors fretted over more banking turmoil. All three indexes ended the day lower, with the Dow Jones Industrial Average shedding almost 300 points.Shares of PacWest dropped 50% as confidence continued to waver in the US banking sector. Meanwhile, Western Alliance stock dropped nearly 40% the lender denied a recent report that executives are exploring a possible sale.The drop in stocks extended yesterday's losses after the Federal Reserve hiked rates for a 10th time, adding to fears that the economy could be headed for a recession. Here's where US indexes at the 4:00 p.m. closing bell on Thursday: <ul><li><a href="https://markets.businessinsider.com/index/s&amp;p_500?utm_source=markets&amp;utm_medium=ingest%3Futm_source%3Dmarkets&amp;utm_medium=ingest&amp;utm_medium=ingest&amp;utm_source=markets">S&amp;P 500</a>: 4,061.22, down 0.72% </li></ul><ul><li><a href="https://markets.businessinsider.com/index/dow_jones?utm_source=markets&amp;utm_medium=ingest%3Futm_source%3Dmarkets&amp;utm_medium=ingest&amp;utm_medium=ingest&amp;utm_source=markets">Dow Jones Industrial Average</a>: 33,127.74, down 0.86% (286.50 points)</li></ul><ul><li><a href="https://markets.businessinsider.com/index/nasdaq_composite?utm_source=markets&amp;utm_medium=ingest%3Futm_source%3Dmarkets&amp;utm_medium=ingest&amp;utm_medium=ingest&amp;utm_source=markets">Nasdaq Composite</a>: 11,966.40, down 0.49% </li></ul>Here's what else is going on: <ul><li><a href="https://markets.businessinsider.com/news/bonds/recession-debt-crisis-us-default-republican-deal-moodys-mark-zandi-2023-5">A recession is more likely under the Republican's debt ceiling plan</a>, Moody's chief economist said.</li><li><a href="https://markets.businessinsider.com/news/stocks/banks-crisis-deposits-collapse-accounts-safe-poll-americans-svb-fdic-2023-5">Nearly half of Americans say they're worried</a> about their money as banking turmoil continues.</li><li><a href="https://markets.businessinsider.com/news/stocks/fdic-deposit-insurance-blanket-bill-ackman-banking-crisis-first-republic-2023-5">Extending FDIC deposit insurance</a> could cost banks' customers more, a former FDIC chair said.</li><li><a href="https://markets.businessinsider.com/news/stocks/western-alliance-stock-price-bank-denies-sale-ft-report-wal-2023-5">Western Alliance shares saw wild swings</a> as the bank denied a report of a possible sale.</li><li><a href="https://markets.businessinsider.com/news/stocks/chatgpt-ai-stock-portfolio-outperforming-investment-uk-funds-finder-outlook-2023-5">A stock portfolio created by ChatGPT</a> is outperforming the top UK investment funds.</li></ul>In commodities, bonds, and crypto: <ul><li>Oil prices wavered, with<a href="https://markets.businessinsider.com/commodities/oil-price?type=wti"> West Texas Intermediate</a> down 0.19% to $68.47 a barrel. <a href="https://markets.businessinsider.com/commodities/oil-price?utm_medium=ingest&amp;utm_source=markets">Brent crude</a>, the international benchmark, edged higher to $72.40 a barrel</li><li><a href="https://markets.businessinsider.com/commodities/gold-price?utm_source=markets&amp;utm_medium=ingest%3Futm_source%3Dmarkets&amp;utm_medium=ingest&amp;utm_medium=ingest&amp;utm_source=markets">Gold</a> rose 1% to $2,058.70 per ounce</li><li>The<a href="https://markets.businessinsider.com/rates/u-s--rates-10-years?utm_medium=ingest&amp;utm_source=markets"> 10-year yield</a> fell three basis points to 3.37%</li><li><a href="https://markets.businessinsider.com/currencies/btc-usd?utm_medium=ingest&amp;utm_source=markets">Bitcoin</a> moved up 1.81% to $28,867.11</li></ul>

US stocks tumble as investors fret over new bout of banking sector volatility

<ul class="summary-list"><li>Recession risks have increased as turmoil snarls the financial sector, according to an IMF report Tuesday. </li><li>The IMF forecasts the global economy to grow 2.8% this year, below its previous 2.9% estimate. </li></ul>The International Monetary Fund trimmed its global growth outlook Tuesday and warned recession risks have grown on tremors in the banking sector.The IMF now sees global economic growth at 2.8% in 2023, slightly below its estimate of 2.9% in January."Risks to the outlook are squarely to the downside," the IMF said. "Much uncertainty clouds the short- and medium-term outlook as the global economy adjusts to the shocks of 2020–22 and the recent financial sector turmoil. Recession concerns have gained prominence, while worries about stubbornly high inflation persist."There's been a recent crisis of confidence in the banking system. Silicon Valley Bank and Signature failed after a run on deposits last month, while other specialist lender Silvergate was forced to wind down operations. Overseas, Credit Suisse was bought up by rival UBS after concerns around the Swiss lender's health. There is a significant risk that the banking turmoil will tighten global financial conditions more than anticipated, which would further weaken business and consumer confidence, the IMF said.Additionally, the Federal Reserve has continued to raise interest rates in a bid to combat inflation, and some economists have warned that its aggressive stance has raised the odds of a recession."With the fog around current and prospective economic conditions thickening, policymakers have a narrow path to walk toward restoring price stability while avoiding a recession and maintaining financial stability," the IMF said.

Recession risks are heightened amid stubbornly high inflation and banking sector turmoil, IMF says

<ul class="summary-list"><li>US stocks fall Tuesday, leaving the S&amp;P 500 lower after three days of gains. </li><li>The 2-year Treasury yield pushed back above 4%, pressuring tech stocks. </li></ul>US stocks finished in the red Tuesday as tech shares bore the brunt of rising bond yields amid easing turmoil within the banking sector. The tech-concentrated Nasdaq Composite put in the worst performance among key indexes. The S&amp;P 500 fell for the first time in four sessions, with the <a href="https://www.spglobal.com/spdji/en/indices/equity/sp-500-information-technology-sector/#overview" target="_blank" rel="noopener">Information Technology sector</a> a main drag. Tech stocks were stung by a rise in the 2-year Treasury yield, pushing above 4% for the first time in nearly a week. Higher yields slice into the value of future profit for tech and other growth companies. Here's where US indexes stood at the 4:00 p.m. closing bell on Tuesday: <ul><li> <a href="https://markets.businessinsider.com/index/s&amp;p_500?utm_source=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingest">S&amp;P 500</a>: 3,971.23, down 0.16%</li><li><a href="https://markets.businessinsider.com/index/dow_jones?utm_source=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingest">Dow Jones Industrial Average</a>: 32,394.25, down 0.12% (37.83 points)</li><li><a href="https://markets.businessinsider.com/index/nasdaq_composite?utm_source=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingest">Nasdaq Composite</a>: 11,716.08, down 0.45%</li></ul>Bond yields rose as some measure of calm settled over the banking industry after developments on Monday. First Citizens reached a deal to<a href="https://www.businessinsider.com/first-citizens-buys-silicon-valley-bank-2023-3?utm_medium=ingest&amp;utm_source=markets&amp;_gl=1*1s68tyu*_ga*MjMxMzA1Mzg2LjE2NTY0NDQxNTU.*_ga_E21CV80ZCZ*MTY3OTk0NDY3My42OS4xLjE2Nzk5NDQ3NTEuNTIuMC4w&amp;utm_medium=ingest&amp;utm_source=markets"> acquire $72 billion of assets of collapsed Silicon Valley Bank</a> for a $16.5 billion discount. Also easing fears was a Bloomberg report over the weekend that the government may offer more support to banks partially to help<a href="https://markets.businessinsider.com/news/stocks/first-republic-stock-today-regional-banks-svb-buyer-first-citizens-2023-3?utm_medium=ingest&amp;utm_source=markets"> First Republic</a> further stabilize. But investors, lawmakers, and regulators are still assessing the fallout from this month's implosion of SVB. "A review will consider whether the supervisory warnings were sufficient and whether supervisors had sufficient tools to escalate," Michael Barr, the Fed's vice-chair for supervision, <a href="https://www.pbs.org/newshour/economy/federal-reserve-considering-stronger-bank-rules-after-svb-failure-official-says" target="_blank" rel="noopener">told the Senate Banking Committee on Tuesday</a>. "I anticipate the need to strengthen capital and liquidity standards for firms over $100 billion," which would have included SVB. Barr <a href="https://markets.businessinsider.com/news/stocks/svb-silicon-valley-bank-textbook-case-of-mismanagement-fed-official-2023-3">called SVB a "textbook case of mismanagement."</a> Here's what else is happening today:<ul><li>A large global sell-off last week was <a href="https://markets.businessinsider.com/news/stocks/deutsche-bank-credit-default-swaps-banking-crisis-stock-market-decline-2023-3">likely sparked by a single trade</a> in Deutsche Bank's credit-default swaps. </li><li>Markets are <a href="https://markets.businessinsider.com/news/stocks/interest-rates-cuts-stock-market-federal-reserve-recession-inflation-blackrock-2023-3">incorrectly anticipating rate cuts</a> from the Fed this year, BlackRock says</li><li><a href="https://www.businessinsider.com/economic-pain-recession-growth-svb-contagion-markets-mohamed-el-erian-2023-3?miRedirects=1">Economist Mohamed El-Erian</a> warns of more economic pain coming as the SVB fallout is likely not contained. </li><li>Why the <a href="https://markets.businessinsider.com/news/stocks/svb-banking-crisis-deposits-loans-credit-crunch-consumers-commercial-economy-2023-3">struggles of mid-sized US banks</a> could be bad news for the Main Street economy.</li><li>People are running to money-market funds - here are the <a href="https://markets.businessinsider.com/news/funds/best-money-market-funds-highest-yields-bank-crisis-deposits-svb-2023-3">8 currently offering the highest yields</a> </li><li><a href="https://markets.businessinsider.com/news/stocks/jeffrey-gundlach-recession-fed-rate-cuts-stock-investing-advice-2023-3">"Bond King" Jeffrey Gundlach warned</a> a US recession will hit in a few months - and outlined what stock investors should do.</li><li><a href="https://markets.businessinsider.com/news/currencies/binance-boss-cz-shows-what-he-thinks-of-cftc-lawsuit-by-tweeting-4-2023-3">Binance boss CZ </a>showed what he thinks of the CFTC's trading violations lawsuit with an enigmatic tweet.</li></ul>In commodities, bonds, and crypto:<ul><li><a href="https://markets.businessinsider.com/commodities/oil-price?type=wtisource=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingest">West Texas Intermediate crude</a> tacked on 0.3% at $73.39 per barrel. <a href="https://markets.businessinsider.com/commodities/oil-price">Brent crude,</a> the international benchmark, rose 0.8% to $78.79. </li><li><a href="https://markets.businessinsider.com/commodities/gold-price?utm_medium=ingest&amp;utm_source=markets">Gold</a> gained 1.1% to $1,975.70 per ounce. </li><li>The<a href="https://markets.businessinsider.com/rates/u-s--rates-10-years"> 10-year Treasury yield</a> rose two basis points to 3.55%.</li><li><a href="https://markets.businessinsider.com/currencies/btc-usd">Bitcoin</a> rose 0.7% to $27,231.10.</li></ul>

US stocks fall as rising bond yields pressure tech amid easing banking sector fears

It looks like <keyword id="15561167" type="General" weightage="20" keywordseo="sunshine-days-for-the-Indian-banking-sector" source="Orion">sunshine days for the Indian banking sector</keyword> after having struggled with a seemingly <keyword id="15561168" type="General" weightage="20" keywordseo="never-ending-gloom-of-rising-non-performing-assets" source="Orion">never-ending gloom of rising non-performing assets</keyword> (NPAs) and the Covid-19 pandemic, which hit their profits hard. The September quarter results of <keyword id="6355548" type="General" weightage="20" keywordseo="public-sector-banks" source="Orion">public sector banks</keyword> (PSBs) seem to have brought cheer for the Indian banking sector with all the major 12 PSBs recording net profits worth Rs 25,685 crore during the period under review. On September 7, Finance Minister Nirmala Sitharaman had lauded all the 12 PSBs for their outstanding fiscal performance. In a series of tweets, she said that "the continuous efforts of our government for reducing the NPAs and further strengthening the health of PSBs are now showing tangible results. All 12 PSBs declared net profit of Rs 25,685 cr in Q2FY23". She said that the combined net profits of public sector banks recorded a year-on-year growth of 50 per cent. Similarly, in the first half of the current fiscal, the 12 state-owned banks recorded total profits of Rs 40,991 crore, which were 31.6 per cent higher year-on-year. Country's largest lender State Bank of India (SBI) reported a 74 per cent jump in profit to Rs 13,265 crore, while Canara Bank reported an 89 per cent jump in profit to Rs 2,525 crore. UCO Bank reported a huge 145 per cent jump in profit to Rs 504 crore, while the Bank of Baroda reported 58.70 per cent profit of Rs 3,312.42 crore in the September quarter of 2022-23. Experts have said that the financial performance of PSBs is expected to improve in the current fiscal of 2022-23 over the previous financial year, as NPAs are coming down and leverage of corporates too has been cut. They informed that NPAs of banks were brought out especially after the asset quality review measure was introduced by the government in 2015. While rising NPAs seem to be under control as of now, the Indian banking system had faced a serious threat from these in 2011, when they started rising and had reached a climax in 2017-18, when they reached 11.18 per cent. Though now the NPAs have come down, experts say that it is a cyclical thing as they keep rising and falling. To help PSBs tide over the NPA problem, the government had infused Rs 3 lakh crore in these banks, which went a long way in stabilising them financially. On the basis of this stability, state-owned banks are now able to issue bonds and raise funds from outside, which is gradually making them more financially independent, industry experts said. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/news/psb-stocks-on-52-week-high-riding-on-record-profits-double-digit-loan-growth/articleshow/95621602.cms" style="">PSB stocks on 52-week high riding on record profits, double-digit loan growth</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/finance/news/rupee-slips-6-paise-to-close-at-81-70-against-us-dollar/articleshow/95604868.cms" style="">Rupee slips 6 paise to close at 81.70 against US dollar</a>

Crunching Numbers: 12 PSBs end Sept quarter notching up ₹25K+ cr net profit

<ul class="summary-list"><li>Bitcoin surged as much as 9% on Wednesday, nearing the important $30,000 level.</li><li>The rally comes as First Republic Bank stokes fresh fears over weakness in the banking sector.</li></ul>Bitcoin jumped as much as 9% on Wednesday, nearing the key price level of $30,000, as banking sector concerns re-emerged.First Republic Bank stock nosedived almost 50% on Tuesday and lost another 20% Wednesday, hitting a record low, after reporting higher-than-expected customer deposit withdrawals.Worries were heightened after Bloomberg <a href="https://www.bloomberg.com/news/articles/2023-04-25/first-republic-said-to-weigh-up-to-100-billion-in-asset-sales?sref=ZTdRrSmf" target="_blank" rel="noopener">reported</a> that the regional bank is in talks for a rescue plan that could involve $100 billion in asset sales. Bitcoin rallied through the turmoil in March as Silicon Valley Bank failed, and industry observers said a similar situation is playing out for the world's largest crypto amid the latest bout of uncertainty. "BTC is seeing a rally because another public bank, First Republic Bank, crashing, has re-stimulated the narrative of 'not your keys, not your money,' leading more and more people to realize the beauty and reliability of bitcoin [and] crypto's decentralized peer-to-peer cash system," Youwei Yang, chief economist at crypto mining company BTCM, told Insider. Bitcoin's rally Wednesday ended a five-day losing streak. The token's been on a tear in April and 2023 broadly, hitting 10-month highs earlier this month to nearly $31,000.Ethereum meanwhile is up 7% in the past day, according to <a href="https://messari.io/dashboard" target="_blank" rel="noopener">Messari,</a> as altcoins like solana and polygon also jumped 8% and 9%.Michael Dunn, chief product officer at derivatives exchange operator Bitnomial, told Insider that traders may be "signaling risk-on sentiment, as they anticipate a potential softer Fed policy and potential liquidity injections surrounding First Republic Bank."Another crypto exec echoed similar sentiments, adding that the slew of bank failures like Silicon Valley Bank last month made investors question the stability of traditional financial services.Turmoil in the sector has highlighted that "perhaps well-founded blockchain-based systems and cryptocurrencies with solid backing and use could be as good or even better, safer, cheaper and faster to use than the traditional banking systems," Mikkel Morch, chairman at investment fund ARK36, told Insider.

Bitcoin surges 9% toward key level of $30,000 as crypto market rallies amid fresh banking sector fears

<ul class="summary-list"><li>There's no chance of a full-blown crisis developing in US banking, according to Blackstone's CEO.</li><li>Silicon Valley Bank failed because of the "interim issue" of high interest rates, Steve Schwarzman said.</li></ul>The troubles that brought down Silicon Valley Bank were sparked by high interest rates and new technology that means bank runs can gather pace faster today, according to Blackstone's CEO Steve Schwarzman.That means the recent banking turmoil is unlikely to snowball into a broader crisis across the US financial sector, he told <a href="https://www.bloomberg.com/news/articles/2023-03-30/blackstone-s-schwarzman-says-us-banking-crisis-mostly-solvable?srnd=markets-vp" target="_blank" rel="noopener">Bloomberg</a> in an interview in Tokyo on Thursday."The banking system is not in any type of conventional crisis," the billionaire businessman said. "We have just an interim issue with interest rates being up and we have a deposit issue caused by technology.""And these are both solvable problems for the vast number of banks," added Schwartzman, who leads the biggest private equity firm in the world with $975 billion assets under management.<a href="https://markets.businessinsider.com/news/stocks/svb-silicon-valley-bank-collapse-jpmorgan-morgan-stanley-bank-stocks-2023-3">Silicon Valley Bank's collapse</a> earlier this month sparked a selloff in stocks of regional US banks, fueling fears that its failure would develop into a broader crisis.But some strategists now see those banks as a <a href="https://markets.businessinsider.com/news/stocks/stock-picks-regional-banks-buying-opportunity-selloff-citizens-synovus-2023-3">buying opportunity for investors</a>, with CFRA saying the sharp falls represent a severe discount on some great banks.SVB's share price crashed after it disclosed massive losses on its bond portfolio, which had <a href="https://markets.businessinsider.com/news/stocks/ftx-svb-stock-market-crash-bond-selloff-federal-reserve-hiking-2023-3">lost value thanks to the Federal Reserve's aggressive rate-hiking campaign over the past year</a>. When borrowing costs rise, bond prices tend to fall because investors can get a better return from parking their cash in savings accounts.But Schwarzman highlighted another factor that drove California lender's failure — <a href="https://www.businessinsider.com/silicon-valley-bank-svb-first-social-media-bank-run-2023-3">digital banking</a>, which enabled people to <a href="https://www.businessinsider.com/svb-decimated-24-hours-digital-banking-trump-regulatory-rollbacks-2023-3">try to withdraw a staggering $500,000 a second</a> over a 24-hour period."This crisis was caused by people on iPhones and other devices, hearing on social media that some bank might be in trouble," Schwarzman told Bloomberg. "They responded with huge withdrawals in a very short period of time, collapsing the bank."But the risks caused by digital banking are limited to banks themselves, so Schwarzman isn't worried about the crisis spreading to other areas of the financial system. That includes his own area, private equity, where investors lock in their cash for a much longer period."It's important to understand that the risk is really restricted to the banking system because of the deposits, and has almost nothing to do with other types of financial institutions which don't have the requirement to give people their money instantly," Schwarzman said.Read more: <a href="https://www.businessinsider.com/svb-decimated-24-hours-digital-banking-trump-regulatory-rollbacks-2023-3">Silicon Valley Bank's spectacular implosion shows how digital banking can decimate a lender in 24 hours</a>

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